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Welcome to News & Events

Published on December 20, 2011, by in Industry News.

Welcome to The Fraud Practice’s FraudBlog; your source for updates on current events, commentary and best practices related to the eCommerce CNP payments and fraud industry.

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The Fraud Practice Offers Free White Paper and Webinar on Custom Modeling & Analytics for eCommerce Merchants

getting most out of consumer authentication with mobile data

The Fraud Practice is hosting a webinar at 1pm ET on December 4th accompanying the new white paper titled “Enabling Custom Modeling & Analytics for The Modern eCommerce Merchant” which will be released the same day. This white paper is intended to demystify the complexity of custom modeling while providing a working knowledge of the capabilities and questions merchants should know if they are considering the use of custom modeling as part of their risk management strategy.

All who register for the live webinar will automatically receive a copy of the new white paper from The Fraud Practice prior to the webinar start time.

Register for the webinar and white paper

More information about the white paper

 

 
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Identity Document Verification as a Lowest Common Denominator Risk Management Technique

The Fraud Practice discusses common issues merchants face with stale or unavailable identity data when attempting to authenticate and verify a user online and how identity document verification can be applied as a “lowest common denominator” technique in the latest feature article.

Too often organizations associate identity document verification with the banking and financial services industry, KYC and AML compliance, and other applications where it is used as a primary risk screening and verification technique. It is important to consider, however, that many other online merchants can benefit from using identity document verification as a secondary form of screening only when required. Because of its global applicability and ability to provide an indication of risk when identity data is otherwise not available for a consumer, identity document verification is something organizations can fall back on as a lowest common denominator fraud detection technique.

Read the full article

 
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MasterCard and Visa to Upgrade 3D Secure Consumer Authentication, Stop Using Static Passwords

MasterCard and Visa are collectively working on a new authentication standard, currently being referred to as 3DS 2.0, which will make further use of cardholder data to reduce the need for authentication challenges. When a challenge is presented under the new protocol, it will rely on one-time-use passwords or biometrics rather than a static password.

3D Secure consumer authentication programs have yet to catch on in the United States to the extent they have in Europe and other regions, but the evolution to 3DS 2.0 may change that. Few details have been released to date on the plans, but already point to some meaningful implications with the 3DS 2.0 protocol co-created by MasterCard and Visa. One of the key initiatives is for 3DS 2.0 to “utilize richer cardholder data,” according to a MasterCard press release, “which will result in far fewer password interruptions.”

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Differentiating Data Analytics from Data Analysis

In an interview with ZDNet, Josh Sullivan, leader of the data science and analytics practice at Booz Allen Hamilton, discusses the importance of human analysis complementing machine analytics. While the focus is on big data for any application, the discussion and points made provide insights and important considerations very relevant to modeling and analytics for fraud and risk management.

While card issuers and financial institutions have long employed modeling and analytics as a fraud prevention technique it is now becoming more common among eCommerce merchants. As a result we are seeing much more talk about machine learning, neural networks and advanced statistical models in the risk management marketplace. Although custom analytic modeling risk services require sophisticated platforms and technology, the reality is that a human element is required to ensure these services continue to run effectively.

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Worldpay Acquires Multi-Channel Payment Provider SecureNet

Worldpay, the UK-based global payment provider, announced their acquisition of SecureNet in mid-November with the deal expected to close before the end of this year. SecureNet, a payment provider offering services for in-store payments, mobile point-of-sale payments and online payments, has over 17,000 merchant clients with annual processing volumes exceeding $19 billion.

This marks Worldpay’s second acquisition of another payments company in as many years following the purchase of Century Payments in 2013.

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The Impact of Manual Reviews on Your Customers and Brand

The Fraud Practice discusses the importance of taking the time to consider the options for performing manual review as it is a good way to protect the two most important assets a merchant has: their customer and their brand.

When an order has a mix of high and low risk signals or the merchant just isn’t sure about the true level of risk, manual reviews provide a better alternative to either refusing the sale or accepting it blindly. When these orders are all declined merchants miss out on the potential lifetime value of many customers they wrongly turned away. Whereas one good purchase experience can lead to many more down the road, falsely labeling a transaction as fraudulent and refusing the sale can lead to that customer never coming back. On the other side of the spectrum, accepting all of these orders and hoping for the best can lead to significant brand damage from high fraud losses and consumers associating the merchant with a fraud problem, both resulting in a negative impact on the merchant’s bottom-line. In this context manual reviews protect both the brand and the merchant’s customers.

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Holiday Shoppers More Likely to Use Cash and Avoid Retailers Who Suffered Breaches

The Target data breach was the story of the 2013 holiday season and several other major retailers have failed to prevent the compromise of their customers’ payment and personally identifiable information since. With this in mind, it should not be too surprising that 45 percent of cardholders responded “definitely not” or “probably not” when asked if they would shop with these retailers this holiday season, while 48 percent said they are now more likely to pay with cash over cards.

Just as the fourth quarter is the largest revenue generating quarter for many merchants; card networks, issuers and acquiring banks enjoy heightened revenues from increased card payment volumes during these three months. While expectations are that consumers in the U.S. will spend more online and in-store this holiday season, some of this gain may not be realized by businesses earning revenues from card processing fees as only 1 in 8 U.S. cardholders indicated they are more likely to shop with credit or debit cards this holiday season.

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Mobile Propels Higher U.S. e-Retail Forecasts for Holiday Season and 2014 Calendar Year

Recent forecasts from eMarketer estimate eCommerce retail sales will exceed $305 billion in 2014, a 16 percent increase from last year, as more than $72 billion in eCommerce sales are expected to occur during the holiday season. These e-retail volume forecasts include transactions completed from mobile devices, which are expected to grow by 37 percent from last year and comprise 19 percent of the total eCommerce market by the end of 2014.

Mobile retail sales are expected hit $58 billion in 2014, accounting for 19 percent of total eCommerce retail sales during the year. Forecasts have predicted rapid mobile growth as this $58 billion mobile sales figure is a 37.3 percent increase from the $42.3 billion in U.S. mobile retail sales during 2013. If the forecast holds true, this will propel mobile to represent nearly one-fifth of total eCommerce sales this year, compared to 16 percent in 2013.

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Digital River Goes Private Pending $840 Million Acquisition

Global eCommerce payments company Digital River has entered into an agreement to be acquired by investor group Siris Capital, LLC in a transaction valued at approximately $840 million. Pending approval of the deal, the publicly traded company will now be private as Siris will acquire all outstanding common shares of Digital River at a premium of about 50 percent over the stock closing price on October 23, the evening the acquisition was announced.

Digital River has 20 years experience in the eCommerce payments industry touting several large clients such as Microsoft, Electronic Arts, Adobe, Lenovo and Citrix. The company  processed over $30 billion in online transactions in 2013 including both B2B and B2C with a focus on digital products and services.

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Couriers Expecting Holiday Shipments to Increase by About 10 Percent This Year

Shipping companies always hire seasonal employees to help with increased deliveries during the holiday season but this year both FedEx and UPS are expecting considerable growth from last season, 8.8 and 11 percent, respectively. Meanwhile the U.S. Postal Service is anticipating a 12 to 14 percent increase in holiday season deliveries. The continued increase in shipments and expectations for this holiday season are directly fueled by growth in online shopping and the couriers have noted multiple days expected to have especially high volumes, which merchants should make note of as well.

While volume is higher across the whole holiday season, for both merchants and couriers, the shipping companies have highlighted a handful of peak volume days. Last holiday season UPS set a company record of more 31 million packages delivered in one day and expects this daily record to be exceeded on 6 different occasions during the 2014 holiday sales season.

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